Too Much Optimism

Earlier this week, we shared our investment outlook with investors, which is available here.  It was also picked up by Seeking Alpha, where we will occasionally share our work to gauge a wider group of investors’ sentiment.  Quite honestly, sometimes it’s just plain fun to see how strongly folks react to someone willing to take a position.  Our last update, written around the November elections, did not exactly get raving reviews when we recommended buying European equities after a nasty decline.  We’ll see what this one brings.  In any case, the bottom line is quite simply: Too much optimism in the short term; better value abroad in the long term.  As is normally the case, this first point is best illustrated by our friend Francois Trahan in the graphic below.  While most talking heads are pointing to The Great Rotation from stocks to bonds, Francois is one of the few strategists we know calling it for what it is: The Great Reaction.

The Great Reaction